Singapore legislation

Clause 75

Right of relevant office holder to recover certain amounts arising from certain transactions

(1)

Where a participant (referred to as the first participant) sells securities at an over-value to, or purchases securities at an under-value from, another participant (referred to as the second participant) in circumstances as described in subsection (3), and thereafter a relevant office holder acts for —

(a)

the second participant;

(b)

the principal of the second participant in the sale or purchase; or

(c)

the estate of the second participant or of the person referred to in paragraph (b),unless a court otherwise orders, the relevant office holder may recover, from the first participant, or the principal of the first participant, an amount equal to the specified gain obtained under the sale or purchase by the first participant, or the principal of the first participant.

(2)

The amount equal to the specified gain is recoverable even if the sale or purchase may have been discharged according to the business rules of a clearing house and replaced by a market contract.

(3)

The circumstances referred to in subsection (1) for a sale or purchase shall be when —

(a)

a specified event has occurred in relation to the second participant or the principal of the second participant;

(b)

either —

(i)

the first participant knew, or ought reasonably to have known that a specified event was likely to occur in relation to the second participant or the principal of the second participant; or

(ii)

the principal of the first participant knew or ought reasonably to have known that a specified event was likely to occur to the second participant or the principal of the second participant,and the specified event occurs within the period of 6 months immediately following the date on which the sale or purchase was entered into.

(4)

In this section —

Definition

“specified event”, in relation to a second participant or a person who is or was, in respect of a sale or purchase referred to in subsection (1), the principal of the second participant, means —

(a)

the making of a bankruptcy order against the second participant or that person, as the case may be;

(b)

the making of a statutory declaration in respect of the second participant or that person, as the case may be, under section 291(1) of the Companies Act (Cap. 50);

(c)

the summoning of a meeting of creditors in relation to the second participant or that person, as the case may be, under section 296 of the Companies Act;

(d)

the presentation of a petition for the winding up of the second participant or that person, as the case may be, before a court; or

(e)

the making of a judicial management order by a court under Part VIIIA of the Companies Act in respect of the second participant or that person, as the case may be;

Definition

“specified gain”, in relation to a sale or purchase referred to in subsection (1), means the difference between —

(a)

the market value of the securities which is the subject of the sale or purchase; and

(b)

the value of the consideration for the sale or purchase,as at the time the sale or purchase was entered into.

Read in full context — Securities and Futures Bill →